Securities Trust of Scotland update - September 2019

Mark Whitehead explains why Europe is presenting some interesting opportunities for income investors.

4 September 2019

Second-half outlooks - Global Equity Income Play Play Video
Mark Whitehead on the outlook for the remainder of 2019

Important themes for the rest of 2019

The first thing to mention is that we really look to invest in companies that have strong organic growth throughout the investment or business cycle. But really what is at the forefront of all investors minds at the moment is whether we're sliding into a global recession and we believe that global dividends as a style should do very well against this backdrop. If there is a coordinated response and we think that there will be from central banks in terms of reducing interest rates, etc. to try and stimulate activity. We believe our laser focus on growth as well should stand the fund in really good stead.

Which countries or sectors offer the best opportunities?

Well, we invest globally but where we're really seeing some very interesting opportunities is across Europe. The European complexes performed poorly, earnings growth is actually being quite slow compared to the US but the valuations now are extremely cheap and we can pick up some very interesting companies, particularly in expensive defensives that we think will do very well against this market backdrop.

Are any geopolitical factors affecting your outlook?

The escalating tensions between the US and China are of course no doubt a concern. We're trying to mitigate this by investing in companies that are able to share the escalating costs of higher tariffs by having strong relationships with their suppliers, but also to be able to pass on these higher tariffs or costs through pricing power in their products and services.